Treasuries ended mostly higher yesterday as a stable U.S. dollar and lower commodities prices gave the market a much-needed hiatus from recent volatility.

Issues moved into positive territory as dealers and investors decided to take a walt-and-see approach to trading the bond market. The benchmark 30-year bond closed unchanged at a yield of 7.39%

"The jury is still out on where the economy and bonds are headed next, and people are waiting for some indications before jumping back into the market," said Anthony Karydakis, senior financial economist at First Chicago Capital Markets Inc. "There's absolutely no conviction."

No fresh news arose to inspire trading, leaving players to follow movements in the currencies and commodities markets. Government bonds derived mild support from weakness in commodity prices and a steady dollar, traders said. Still, most agree the upside of the market is limited by participants willing to sell at the highs.

The Commodity Research Bureau's index of 21 futures prices weakened 0.46 points yesterday to 230.41.

With little in the way of fresh news or movement in other financial markets, Treasuries held well within their established trading range. Traders said activity was dominated by speculative players, while retail accounts remained on the sidelines to avoid volatility.

The tug of war between the bulls and bears has intensified in recent sessions as the bond market came up against a barrage of reports on the economy.

At issue is whether growth has moderated from the brisk pace seen earlier in the year. At risk is the health of a market already weakened by signs of mounting wage pressures and lingering fears of higher interest rates.

Fixed-income analysts remain decidedly mixed about overall economic fundamentals, with some forecasting sorer growth in the third and fourth quarters of 1994, and others expecting the economy to expand further through the end of the year.

The notion that the pace of economic growth may moderate in the months ahead has gained credence in recent weeks as reports of slower activity came in, analysts said.

But bond investors are not getting ahead of themselves. At best, they remain cautiously optimistic that the bearish cloud that hovered over the Treasury market in recent months will gradually dissipate.

John Canavan, analyst at Stone & McCarthy Research Associates, said economic statistics released Thursday provided market players with no new insight into the economy's performance, leaving them to look ahead to the upcoming meeting of the Federal Open Markets Committee and the June employment report.

The Commerce Department reported that May durable goods orders rose 0.9%, when the median forecast called for an increase closer to 0.2%. April's durable goods orders were revised to show a 0.1% increase from the 0. 1% decrease previously reported.

The market took the durables report with a grain of salt because the report is known to be extremely volatile from month to month and because a hefty amount of the May increase came in the aircraft orders component, Canavan said.

The Labor Department reported new state jobless claims rose 3,000 to 352,000 during the week ended June 18.

In futures, the September bond contract ended up 4/32 at 103.24.

In the cash markets, the 57/8% twoyear note was quoted late Tuesday up 2/32 at 100.03-100.04 to yield 5.93%. The 63/4% five-year note ended up 5/32 at 100.06-100.08 to yield 6.69%. The 71/4% 10-year note was up 5/32 at 101.02-101.06 to yield 7.07%, and the 61/4% 30-year bond was unchanged at 86.08-86.10 to yield 7.39%.

The three-month Treasury bill was down three basis points at 4.23%. The six-month bill was down one basis point at 4.71%, and the year bill was down one basis point at 5.20%.

Corporate Securities

The primary market's floodgates began to open yesterday as the stable Treasury market paved the way for more than $1.3 billion in new corporate issues.

A $700 million issue of HydroQuebec debentures, due July 7, 2024, was priced at par to yield 8.05%.

The notes have a put option that can be exercised in 12 years at par and are priced to yield 95 basis points more than comparable Treasuries.

Rated A1 by Moody's Investors Service and A-plus by Standard & Poor's Corp., the issue will be sold through underwriters led by CS First Boston.

BCH Cayman Islands Ltd., a unit of Banco Central Hispanoamericano, issued US$225 million of guaranteed subordinated notes due June 15, 2004, said lead manager Morgan Stanley & Co.

The notes were given a coupon of 81/4% and priced at 99.26 to yield 8.36%, or 125 hasis points more than comparable Treasuries. The noncallable issue is expected to be rated A3 by Moody's and A-minus by Standard & Pools.

A $200 million issue of Presley Cos. senior notes, due July 1, 2001, was priced at par to yield 12.5%.

The issue is noncallable for four years and is rated B2 by Moody's and B-minus by Standard & Poor's. The issue will be sold through underwriters led by Donaldson, Lufldn & Jenrette Securities Corp.

A $75 million issue of Protective Life Corp. senior notes, due July 1, 2004, was priced as 7.95s at 99.816 to yield 7.977%.

The noncallable issue was priced to yield 90 basis points more than comparable Treasuries. Rated A3 by Moody's and A by Standard & Poor's, the issue will be sold through underwriters led by Goldman, Sachs & Co.

TVA issued $200 million of debt due 1997 via CS First Boston.

In the secondary market for corporate securities, spreads of investment-grade issues narrowed by 1/8 of a point, while high-yield issues generally ended unchanged.

Rating News

Duff & Phelps Credit Rating Co. assigned an initial rating of BBB-plus to the U.S. dollar-denominated debt obligations of the Republic of Chile.

Duff & Phelps said the rating reflects the structural improvements in the Chilean economy and the consensus on economic policy, which have fueled the country's strong growth rate over the past decade.

Since the mid-1970s, Chile generally has implemented policies that have fundamentally increased the economy's efficiency: privatization, the liberalization of prices, and trade barriers, and a full commitment to a market economy, Duff & Phelps said.

Economic growth has been strong at more than 6% per year during the last dude. Further, the Chilean economy has diversified significantly from its dependence on the highly cyelicat copper mining industry. Increased domestic saving rates, aided by a forward-looking pension program and consistent public surpluses, have helped finance high investment rates while limiting the need for

foreign borrowing and account deficits, the rating agency said.

To maintain its record of strong growth and improving credit risks over the long term, Duff & Phelps said Chile will need to sustain its recently high rates of domestic saving and investment. Chile's ability to maintain a competitive exchange rate while liberalizing capital flows will pose challenges. Current account deficits will need to be limited and export growth must continue to gradually reduce Chile's sizable debt burden with respect to both GDP and exports, the rating agency said.

Despite its concerns, Duff & Phelps said it expects that Chile will continue to expand reforms and remain economically stable, and that the rating will reflect this progress over time.

This rating represents the first time that Duff & Phelps has assigned a sovereign rating to the U.S. dollar-denominated debt of Chile.Treasury Market Yields Prev- Prev Treasurer Week Month 3-Month Bill 4.23 4.18 4.206-Month Bill 4.71 4.59 4.741-Year Bill 5.20 5.09 5.192-Year Note 5.93 5.77 5.933-Year Note 6.21 6.11 6.245-Year Note 6.69 6.60 6.687-Year Note 6.72 6.68 6.7310-Year Note 7.07 7.93 7.0830-Year Bond 7.39 7.35 7.35 Source: Cantor, Fitzgerald/Telegerate

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